Biden Expands Sanctions Authorities To Target Financial Facilitators of Russia’s War Machine

U.S. President Joe Biden today will sign an executive order allowing Washington to broaden import bans on certain Russian goods and to impose sanctions on financial institutions that help Russia evade sanctions. It will make it clear to foreign financial institutions that they risk losing access to the American financial system if they facilitate significant transactions relating to Russia’s military industrial base, TURAN's Washington correspondent reports.

"Together with our allies and partners, we have put in place the largest set of sanctions and export control actions ever imposed on a major economy to undercut Russia’s ability to wage war, and to hold Russia accountable for attempting to conquer its neighbor by force and subjugate its people," National Security Advisor Jake Sullivan said in a statement.

He went on to add, "These new sanctions authorities will make clear to foreign financial institutions that facilitating significant transactions relating to Russia’s military industrial base will expose them to sanctions risk. We are sending an unmistakable message: anyone supporting Russia’s unlawful war effort is at risk of losing access to the U.S. financial system."

The new order will give the U.S. Treasury and its allies new tools to target the networks Moscow was trying to put in place to circumvent these sanctions through the use of front companies and “witting and unwitting financial intermediaries” senior U.S. official told reporters on a call, speaking on condition of anonymity.

“We’ve sanctioned a number of these companies that we’ve found, but ultimately the choke point for these companies and Russia’s ability to continue to try and circumvent our sanctions is the financial system... What this tool allows us to do is to target those institutions and give them a very stark choice,” one of the offiicals said.

The U.S. has repeatedly warned companies against evading American sanctions imposed on Russia, and has targeted firms in the UAE, Türkiye, and elsewhere that it has accused of helping Moscow skirt the measures. Senior U.S. officials have also traveled to those countries to warn that businesses could lose access to G7 markets if they do business with entities subject to U.S. curbs.

Washington’s initial sanctions and export controls have had a meaningful impact, with Russia’s economy now 5% smaller than predicted before the war and grappling with a benchmark interest rate of 16%, according to senior Biden administration officials.

The executive order will also give Washington the ability to ban products that originated in Russia but were “substantially transformed” outside of the country, including seafood and diamonds, another senior official said.

The action comes after the G7 countries last week announced a direct ban on Russian diamonds starting Jan. 1 followed by phased-in restrictions on indirect imports of Russian gems from around March 1.

The U.S. has already banned the direct import of non-industrial Russian diamonds, but this measure would extend the ban to cover Russian-origin diamonds processed elsewhere.

Treasury Secretary Janet Yellen said in a separate statement:   “And we will not hesitate to use the new tools provided by this authority to take decisive and surgical action against financial institutions that facilitate the supply of Russia’s war machine”